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Insights 13: 21 April 2023
Research Note: How New Zealand handled Covid, by Des Gorman and Murray Horn
Podcast: The Initiative's fellows on New Zealand's education decline
Newsroom: Oliver Hartwich on France's erratic foreign policy

Supercharge New Zealand with supply-side reforms
Dr Oliver Hartwich | Executive Director |
After a massive amount of fiscal and monetary stimulus, New Zealand’s economy overheated. The Reserve Bank of New Zealand (RBNZ) faces an uphill battle to bring inflation under control. It tries to do so by dampening demand. I wrote about this in last week’s Insights.

But the key to stabilising our economy is not merely to rein in demand – it should also bolster the supply side. And this is what I want to spell out today.

First, let’s open our doors to foreign direct investment (FDI). FDI brings fresh capital, innovation, and know-how. New Zealand must become a magnet for investors, shedding its reputation for being hard to navigate. We need to simplify regulations and foster an attractive business environment for international investors.

Second, we must properly reform our resource management laws. The current system is cumbersome, slow, and discourages development. David Parker’s replacement is even worse. We need a different approach that streamlines planning processes. Doing this would speed up much-needed housing and infrastructure projects, creating jobs and boosting our economy.

Third, it is time to embrace immigration. Migrants bring skills, diversity, and dynamism to our economy. Let’s open our borders, welcome talent from around the world, and design an immigration system that meets our labour market needs.

Fourth, we should rid ourselves of restrictive licensing arrangements. This will encourage entrepreneurship, enabling businesses to flourish and generate employment opportunities. It is madness, for example, that the Nursing Council can obstruct the establishment of additional nursing training capacity.

Fifth, it is time to reward councils for growth. By implementing tax-sharing arrangements with central government, we can ensure local authorities and local communities have an interest in promoting economic development in their regions.

Sixth, we must declutter our bureaucracy. Unnecessary regulations stifle business and create inefficiencies. By eliminating red tape, we can unleash the productive capacity of our economy and empower businesses to thrive.

The focus of economic policymakers must shift to the supply side. New Zealand must enact bold reforms to grow from its current economic crisis.

By embracing FDI, simplifying resource management laws, opening our borders, eliminating restrictive licensing, incentivising councils, and cutting bureaucracy, we can create a more prosperous and resilient future for all.

So, let’s not just talk about economic reform – let’s demand it, especially in this election year.

Why Britain is in the Pacific
Dr James Kierstead | Research Fellow |
On March 31st, at a meeting of member-countries, it was agreed that the UK would join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The CPTPP is one of the world’s largest free-trade blocs, accounting for 13% of global GDP, 15% of global trade, and 500 million people.

New Zealand is a founding member of the agreement as well as its depositary – the nation to whom an international treaty is entrusted. New Zealand is also the chair of the CPTPP this year, though its role in helping Britain to the table goes back further, to when New Zealand sent trade negotiators to the UK after the Brexit vote.

With the country playing such a big role in this major international organization, you’d think that the news of Britain’s accession would gain extensive coverage in the New Zealand media.

It did receive a few notices, including a brief piece by Thomas Manch that appeared on Stuff on March 31st, the day Britain’s entry was confirmed. By the next day, though, The Dominion Post had decided more important things were going on. It led with the Stuart Nash donations scandal, plus a side serving on the price of eggs.

It’s possible that The Dom Post’s editors were swayed by the UK-based commentators that have downplayed Britain’s entry to the CPTPP. For them, the move is simply an exercise in imperial nostalgia and an attempt to follow through on promises of a ‘global Britain.’

The critics are right that the consequences for British growth may not be enormous. Even the UK’s own Department for Business and Trade has estimated that the deal would boost British GDP by only about 0.08% over the next 15 years.

In many ways, though, Britain’s entry is more significant for the other members of the CPTPP than for Britain itself. If the move puts Britain into the Pacific, it also brings the Pacific’s largest trading bloc into Europe, not to mention the Atlantic.

The move’s greatest significance, though, may be symbolic.

What Britain’s move may herald is, in fact, a new age of diplomacy in which nations look to join whatever organizations best serve their interests, geography be damned.

If that’s right, the CPTPP’s welcoming of a new member may be pretty important after all. Even more important, perhaps, than the price of eggs in Aotearoa.

Blowin’ in the Wind
Dr Matthew Birchall | Research Fellow |
Wellington boasts three things in abundance: great coffee, civil servants, and wind.
But it seems that the city council forgot to factor in the latter when designing its street lamps.
In a shocking revelation, the council announced last week that all 17,000 street lamps in the city were at risk of toppling over like dominoes due to a design flaw that ignored the impact of Wellington’s notorious southerlies.
This is akin to a city planner in Venice forgetting about the canals or a municipal government in Arizona overlooking the desert. Wellingtonians are no strangers to battling the elements, but fighting their own street lamps is a whole new level.
Residents, understandably concerned about the risk of being hit by a 11kg flying object, have criticised the council for its oversight. “It’s like building a bridge without a foundation,” said Terry Topple, a disgruntled local business owner who managed to make it to work unscathed.
Mayor Tory Whanau described the situation as a “clear and unacceptable safety risk” and urged caution. But let’s be honest, caution can only get you so far when you’re dealing with a city full of falling lamps.
That’s where the practical approach of planting more trees as windbreaks comes in. Not only is it environmentally-friendly, but it also has the added benefits of improving air quality and reducing noise pollution. Think of it as a green new deal.
Some Wellingtonians are even managing to look on the bright side. “At least we can see the stars at night now,” said a local hospitality worker, while another resident proposed using public money to create a sculpture park from the fallen lamps. The Dead Light District, anyone?
Despite the creative solutions, many locals are left wondering how their city could have fallen into such a state of disrepair. “It’s embarrassing, really,” said Mr. Topple. “We’re the capital city of New Zealand, and we can’t even keep the lights on.”
Perhaps it’s time for the city council to start factoring in the wind when designing its public infrastructure. Or better yet, maybe they should just invest in some giant paperweights or fans that blow in the opposite direction.
Either way, Wellingtonians would do well to avoid street lamps in the near future and arm themselves with umbrellas made of reinforced steel.
And someone urgently needs to remind the council that Wellington can get windy.

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